Washington is the only U.S. city where housing values are going up. Real estate data company Clear Capital called the market—where values jumped 5.3 percent in 2010—the “healthiest in the nation.”

According to Standard & Poor’s, D.C. the market has appreciated 83 percent in a decade, higher than any other city.

“We’re seeing rents rising for sure, and home values, too,” said Megan Bolton, at the National Low Income Housing Coalition. “At the same time, wages have been falling in D.C.; that certainly makes it tougher for people to afford housing.”

The District’s 19.2 percent poverty rate is nearly four points higher than the national average. As housing costs and poverty rates grow simultaneously, debates over development in D.C. are heating up.

The growth of the housing market has not resolved longstanding race and class inequalities in the city.

Rising prices have been concentrated in northwest neighborhoods: Woodley Park, Cleveland Park, and Friendship Heights saw considerable jumps in sale price in the last year. Business has been good for high-priced realtors like TTR Sotheby’s, which celebrated its new downtown office opening in October.

Meanwhile, largely black Prince George’s County has a 5.3 percent foreclosure rate, topping the metropolitan D.C. area. By comparison, there is a 0.8 percent rate in majority-white Arlington. Sixteen foreclosure assistance organizations surveyed throughout the region in 2009 reported that 61 percent of their clients were black, and 20 percent were Latino or Hispanic.

In the District, white households raked in a median income of $99,220, while black households made $37,430 and income amongst hispanics hovered right above the city’s $60,798 median.

Developing story

In “changing neighborhoods,” marked by rapid development and rising prices, the task of preserving affordable housing looms large.

Demographic changes on H Street since 2000

“The question is how do you develop in a way that allows low-income communities to stay in place,” said Derek Hyra, the author of a forthcoming book on gentrification in D.C.’s Shaw neighborhood. “Redevelopment has sought to move poverty out of the city.”

D.C. is the ninth most expensive rental market in the country, asking $1,461 for a two-bedroom apartment at fair market rate, according to the National Housing Conference, a D.C.-based research group. The group says housing is defined as “affordable” when the rent or mortgage payment does not exceed 30 percent of the tenant’s income.

A D.C. resident has to make $58,440 a year for a 2-bedroom, fair market apartment to be affordable, using this metric. A fifth of D.C. residents struggle on $22,314 or less.

The study also looks at five sectors that are hiring the most nationwide. Four of them—groundskeeper, janitor, office clerk, and security guard—have average salaries far too low to make rent, let alone home ownership, affordable in the District.

Home values above District average after the recession.

Development works in D.C. much the way it works everywhere else in the country: Housing and retail establishments pop up where people with spending power can spend—or in places where they might soon spend.

“With that dynamic comes a lot of conflict,” said Hyra. “There’s a question of who can and cannot afford new amenities.”

‘When you see the cranes’

Sotheby’s and other high-priced realtors continue to make their biggest hauls in northwest D.C, but they’re also selling high-priced condos for more rugged, early adopters of “up and coming” neighborhoods.

The company lauded the rapid sale of 16 out of 18 condos at the Atlas Lofts, adjacent to the gentrifying H Street area. Not only were the units snapped up, but Sotheby’s boasts that they were “sold at the highest price per square foot values in the submarket.”

Next door on Maryland Avenue, a crane looms high above Clark Realty’s 257-unit high-end housing development. The Arlington, Va., company boasts that The Flats is “just steps from H Street,” and will bring luxury to “a neighborhood that has not benefited from new residential development in many years.”

Both high-end developments sit on the border between an H Street area that Hyra calls “the next U Street” and the predominantly black Carver Langston neighborhood where a quarter of residents were unemployed and living in poverty between 2005 and 2009. The declining median income in the neighborhood—it’s seen an 11 percent drop since 1980 (in 2010 dollars)—puts the luxury lofts out of reach for most current residents.

“When you see the cranes, you know poverty is being shifted,” said Hyra.

Public housing faces obstacles

Poverty rates on H Street have dropped and now hover above the District average.

The National Housing Conference argues that a rise in property values—and the resulting tax revenue—should be devoted to housing subsidies for a growing segment of residents living paycheck to paycheck.

This “value capture” method, which hasn’t been tried in D.C., would assure that development holds space for lower-income residents—a task that federal public housing programs have been unable to manage.

The Senate voted in October to slash the Department of Housing and Urban Development’s 2012 budget by 10 percent. The housing coalition’s Bolton says looming cuts to federal housing programs endanger the existing recipients of vouchers at a time when demand for housing help is exploding.

Family incomes on H Street have nearly doubled in a decade, approaching the District average.

Fifty thousand District residents are on waiting lists for public housing assistance, according to the D.C. Housing Authority.

Redevelopment that caters to the rich is difficult to forestall, but not inevitable. Housing experts say D.C.’s progressive tenant law requires landlords to offer existing residents the opportunity to buy a property before it is sold for redevelopment. In Mount Pleasant, a Latina family joined fair housing advocates to turn back a high-end redevelopment plan that would have meant their eviction.

On Georgia Avenue NW, local businesses and community groups are following their lead. Across the river in Ward 8, Councilman Marion Barry has called for the creation of gentrification commissions to ensure that longtime low-income residents don’t get priced out and pushed out.

That is a present danger in the District, as residents have to spend an increasing portion of their pay on housing—in many cases more than half of their income. “There is a heightened risk of families becoming homeless,” said Bolton.

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